Evan Schuman's StorefrontBacktalk

Another group of retail technology analysts sat down Thursday late afternoon to look at the retail technology week that was. This week’s panel independent retail technology consultant John Fontanella—veteran analyst with the Aberdeen Group and AMR Research—along with returning guests IHL President Greg Buzek and the Retail Systems Alert Group’s Paula Rosenblum. StorefrontBacktalk‘s Editor Evan Schuman moderated. This week’s topics were Alien’s delayed IPO and the problematic ROI picture of kiosks. If some disappointing earnings and a few economic darkclouds are any indication, the retail tech sector may be in for a serious downturn. If so, what segments will fare well and which will likely get bloodied?

A few vendors have been pushing digital watermark technology—somewhat equivalent to a 21st Century microdot—as a clever way to bridge the physical store and online worlds, without the need for keyboard interactions. The cellphone becomes the remote control. Is this where much of retailing is headed? Will it work? What are the practical implications for customer service?

Are there topics or panelists you’d like us to consider for next week? Please don’t be shy.…

A new study of retail kiosks found a very short lifespan, but it’s mostly due to new technology and a retailer’s desire to upgrade. But since that is a trend unlikely to change in the next few years, it’s something for a kiosk-purchasing retailer to remember when negotiating price and calculating both a Return On Investment and Total Cost of Ownership.

The average kiosk replacement time was 2.3 years, the lowest of the retail packages examined. including loss prevention equipment (3 years), CRM/Loyalty (2.7 years), Labor Scheduling (2.6 years), Inventory (3 years) and POS Backoffice (2.4 years), according to the IHL Consulting Group report. By an even greater margin, the kiosks examined were much younger, typically 1.8 years old compared with the other products, which ranged from POS at 5.5 years old to Loss Prevention, at 3.6 years old.…

We're starting to hear about more digital watermark applications, where the image-capturing (camera) and communication capabilities of cellphones make them ideal tools to connect printed material with Web sites. We reported last month about NeoMedia and its digital watermark flavor called iPOS (Interactive Point of Sale). This week saw an Oregon company called Digimarc roll out its version in a series of cafes in Japan.

The two approaches illustrate the versatility of this hybrid, which literally is multi-channel as it bridges a customer experience from a purely brick-and-mortar activity--such as looking at a poster in a promotion display--to online. But it does it with virtually (no pun intended) no physical activity on the part of the customer. Read more...

Here’s a discomforting statistic. Despite the sales pitches of payment processing companies telling retailers to avoid errors and costly credit card problems by outsourcing those efforts, new data finds that about 60 percent of data compromises are because of third-party processing errors and only about 40 percent are merchant mistakes.

The figures, released this week by Ambiron TrustWave, a Chicago-headquartered PCI security audit compliance firm. “POS developers, integrators and IT firms are not following PCI DSS and are leaving merchants at risk,” according to a slide Ambiron prepared for a conference. “The Majority of the compromises were caused by a fault in the service provided by a third-party to a merchant.”…

One problem that has come with E-Commerce’s love affair with multimedia is tracking royalties. Even assuming that all electronic storefronts are honestly and completely reporting music and video revenue, the huge array of different formats and specs make the process difficult at best for content creators. With multimedia sales now becoming a key part of the mobile experience, the data-incompatibility issues are likely to grow.

In this industry, though, wherever there’s a problem, there’s someone around trying to make money off of the problem and perhaps whittle the problem down in the process. A vendor called RoyaltyShare next week will launch a service for aggregating and monitoring digital sales data and will also announce deals with a few mid-sized independent record labels. The company is run by Bob Kohn, who had co-founded the eMusic music download site and had also been a vice chairman of Borland Software. Product details were scarce, other than it being Web-based and that it is tweaked to grab sales data sites including iTunes, Napster, eMusic and Rhapsody.…

Here’s a piece of retail technology that’s more chemical than digital: For about a penny each, retailers will–within two to three years–have the option of placing stickers on a piece of fruit or vegetable to reveal if it’s ripe yet, thanks to a University of Arizona assistant professor of agricultural and biosystems engineering named Mark Riley.

The story, coming to us from the Arizona Daily Star, says that a marker on Riley’s RediRipe stickers detects ethylene gas, which is released by fruit or vegetables as they ripen. As that happens, the sticker turns from white to blue. The more ethylene the fruit produces, the darker the blue. The color shift needs about 24-48 hours, depending on how fast the fruit is ripening. A few bugs that still need to be peeled away: The stickers do not change color to reflect an over-ripe or rotten piece of fruit and not all fruit produces enough ethylene to be detected by the the sticker. But given the tons of product discarded every year and the burden on the supply chain to quickly move the produce from where it goes to where it’s eaten, this looks like one academic effort that may truly bear fruit.…

When Wal-Mart corporate wants to change a policy or procedure, it's fond of trying it in a small way in an out-of-the-way place to see if it works. Read more...

As E-Commerce turns almost all retailers into global companies, it’s interesting to note that Visa and MasterCard have agreed to pay a total of $336 million to settle a class-action lawsuit alleging the credit card firms shortchanged American consumers in foreign currency transactions, according to an AFP story.

The story said the comanies had been accused of adding surcharges to credit and debit card transactions. As credit card transaction fees account for a growing percentage of retail costs, companies will need to rely on technology to accurately track exchange rates. The habit of some E-tailers to sit on and combine smaller transactions to save on credit card charges makes this even more challenging. Should the exchange rate apply to the instant the purchase was made or the moment it was submitted to the credit card processing agent?…

In what's been called the self-checkout diet plan, retailers are learning the unintended consequences of self-checkout systems, as they see sales of candy, Hollywood tabloids, batteries and other checkout lane impulse items plummet.

A very small part of the answer for this phenomena is that retailers are typically opting to not put such impulse items next to self-checkout systems, said Greg Buzek, president of the IHL retail consulting firm, which has just completed a self-checkout study. The core of the problem is simply the way consumers interact with self-checkout systems. Typically, they have to pay much more attention to choosing a lane and to watching their products and scanning them, thereby leaving almost no time for browsing magazines or otherwise being tempted. Read more...

The $9 billion Subway chain of more than 26,000 sandwhich restaurants is going to be ringing customers up with its six grams of fat or less messages in August, as one of its franchisees experiments with mobile marketing.

The franchise has struck a deal with mobile payment vendor MobileLime "to market to preferred customers in real-time by offering alerts and discount coupons to cell phones," according to a MobileLime source.Read more...

Visa on Friday changed its retail security requirement structure, which will—because of a change in definition of what a qualifying transaction is--have the impact of forcing more retailers to use its more stringent security procedures.

The core change is including all transactions when determining what level a retailer should be. Before, the criteria was limited to online purchases. "The most significant modification involves the Level 2 merchant category, which previously only applied to merchants processing between 150,000 and 6 million Visa e-commerce transactions per year," a Visa statement said. "Level 2 has now been broadened to include all acceptance channels and applies to any merchant processing 1 million to 6 million Visa transactions per year."Read more...

At the end of every week, StorefrontBacktalk.com will assemble some of the industry’s top consultants, analysts and IT executives to discuss that week’s retail tech developments. We inaugurated our StorefrontBacktalk Week In Review on July 21.

The July 21 panel included Pete Abell from IDC, Paula Rosenblum from the Retail Systems Alert Group, Greg Buzek of IHL and Mark Rasch, a former federal prosecutor who today serves as VP for Solutionary.

The panel–moderated by StorefrontBacktalk Editor Evan Schuman–ripped into a wide range of topics. Listen to Rasch, Rosenblum, Buzek and Abell discuss the new PCI changes announced by Visa or Rosenblum, Rasch and Buzek debate how multi-channel will likely do this holiday shopping season. Abell tackled HP’s RFID-rival Memory Spot alone while Rasch, Buzek and Rosenblum ganged up on self-checkout trends, including a fascinating discussion about self-checkout obliterating impulse purchases. Rosenblum and Buzek also argued about workforce management technology, concluding that the larger companies are–much more than they initially thought–avoiding workforce technology.

Please listen and shout your feedback to us.…

Outsourced live chat is nothing new and as long as there is no law passed requiring live chat personnel to answer the questions being asked and not just read from a script, its value will be limited. But one veteran provider of these typing services has been toying with an interesting twist. Live Person is now pushing a database-driven process that automatically pops up a live chat session when it concludes the customer is having some difficulty, such as with an abandoned cart or he/she seems to be waffling between two similar products.

But the interesting part is that the software looks at the nature of the products involved in the confusion and assigns an appropriate product specialist to handle that query, to allow–in theory–a much more sophicated and specific exchange. Said one company exec: “If you’re buying a snowboard, you’re matched only with a snowboard gearhead.” This is an effort we’re going to be watching.…

Coupons are a time-honored retail tradition, but like secret Black Friday promotions and regional pricing, there is a good argument that they may no longer make sense. There are many Web sites today that are designed to empower consumers, often ostensibly against the interest of big business, whether those are major retailers, government agencies or large publishers.

Some of the more interesting ones help consumers get around mandatory free site registration—such as www.bugmenot.com--or get to a human voice when locked inside a voice-system hell (www.gethuman.com).Read more...

Just what retail IT execs need in the middle of a July heatwave: reminders that the holiday shopping season is waiting around the corner, like a heavily-armed drunk street gang. (Sorry. Heat waves in New Jersey have a way of souring a guy.)

What brings up this merry thought is a statement from Keynote Systems, the Web performance tracking people. Torturously reminding everyone that Black Friday is only 130 days away, Keynote said it was doubling the capacity of its main load testing service, LoadPro. They’ve added three new cities for testing: Seattle, Denver and Miami, for a total of ten locations across five Tier-1 backbones, as well as increasing network bandwidth capacity by almost 60 percent. What Keynote is doing is fine and necessary, but did they have to spoil a perfectly good summer and announce it now?

To listen to top industry analysts discuss the upcoming holiday season and what it will likely mean for multi-channel marketing efforts, please click here.…

Retailers with larger brick-and-mortar operations are going to be facing more demanding PCI security requirements this Fall because of a change in how Visa USA wants to group retailers, according to a report in Digital Transactions. Among the changes could be more internal audits.

The new tier definitions come as the card networks are making other changes to tighten data security. Visa is preparing to make a set of security recommendations for point-of-sale software, known as the Payment Application Best Practices rules, a requirement for merchants and software developers. To read the full story, please click here.…

A new report from industry analyst firm The Aberdeen Group does not bring a lot of optimistic news for RFID proponents, with predicted trouble for finding sufficiently-experienced RFID personnel, migrating to new data-collection methods such as mobile and biometrics as well as predicted major hiccups with efforts to scale RFID to the next level.

One bright note: the survey finds that users no longer see cost as the single most important factor. That’s significant because it’s the first time in the years that Aberdeen has conducted this study where interviewees did not choose cost as the most important issue when making RFID decisions.

Report author John Fontanella, Aberdeen’s Senior VP and service director for supply chain and retail research, said one of the most troubling findings in the survey of RFID users was that most companies were doing the absolute minimum to comply with mandates. In other words, they weren’t leveraging what they are required to do for a major customer and using it to improve their own operations. To read the full story, please click here.…

Vendor-initiated surveys have a remarkable history of establishing that the vendor’s service or product is every bit as wonderful as the vendor’s always said. Given the tremendous discretion involved in phrasing the questions, choosing who is being asked and how the answers are analyzed, self-serving vendor research shouldn’t change a lot of minds.

That said, MasterCard PayPass on Tuesday released “internal MasterCard data”–some of it dating back to last September–that showed the average ticket being about $20 and that consumers used credit cards about 18 percent more once they became contactless. “Though PayPass technology can also be used for transactions exceeding $25 (at which point a signature or PIN is required for verification), roughly 75 percent of all PayPass transactions were for purchases below $25 and approximately 45 percent of all PayPass transactions were for purchases below $10.”

To the extent that the point is that consumers are carrying less cash than a year ago, they clearly are. But a lot of that involves cultural changes, making it not clear how much of that 18 percent increase would have happened anyway.…

Symbol Technologies and Intermec today officially ended their 16-month-old lawsuit that had Symbol accusing Intermec of infringing various Symbol bar code scanning and wireless patents. Without announcing the terms, the companies issued a joint statement that they “have reached an agreement that settles all outstanding intellectual property (IP) disputes between the two companies.”

“Under the settlement agreement, Intermec and Symbol have cross-licensed certain patents, have entered into four-year covenants not to sue with respect to remaining patents, and have released patent infringement damage claims that may have existed on the settlement date or may arise before the covenants expire,” the statement said. Last September, the pair had settled the RFID portion of the dispute, with today’s announcement resolving the non-RFID wireless portion.…

A new report from industry analyst firm The Aberdeen Group does not bring a lot of optimistic news for RFID proponents, with predicted trouble for finding sufficiently-experienced RFID personnel, migrating to new data-collection methods such as mobile and biometrics as well as predicted major hiccups with efforts to scale RFID to the next level.

One bright note: the survey finds that users no longer see cost as the single most important factor. That’s significant because it’s the first time in the years that Aberdeen has conducted this study where interviewees did not choose cost as the most important issue when making RFID decisions.

Report author John Fontanella, Aberdeen’s Senior VP and service director for supply chain and retail research, said one of the most troubling findings in the survey of RFID users was that most companies were doing the absolute minimum to comply with mandates. In other words, they weren’t leveraging what they are required to do for a major customer and using it to improve their own operations.

“Most are giving no thought beyond just satisfying the immediate need of collecting the data. The slow adopter is trying to meet whatever mandate they’ve been given. Some 99 percent are only adopting because they have to, because someone is telling them to, whether it’s DOD, Wal-Mart, whoever,” Fontanella said. “Now that the information is collected and paid for, it’s time to start turning that RFID data into something much more positive, to get a much better return on their investment.”

Not all companies, though, are passing up the opportunity, he said. After Wal-Mart started forcing various suppliers to deliver, some suppliers decided to “do what I have to do to meet the mandate” and “they were forced to automate the tagging process. But they then that as the opportunity to …

With high-turnover being as much a part of an industrial kitchen as cracked pepper, the Chief Financial Officer (and acting CIO) of the Fuddrucker chain of restaurants often looks for ways to get control of his training budget.

CFO Matt Pannek thinks he may have found a tasty answer in a couple of hundred multimedia kiosks, which will be churning out their multimedia informational entrees in the chain's kitchens and bakeries. The IBM Anyplace kiosks cost Fuddruckers $3.5 million "just for the hardware," but it's complicated because the chain also purchased from IBM about 130 POS units and they also upgraded the monitors in addition to purchasing the roughly 175 kiosks, Pannek said. Still, the CFO for the privately-held Austin, TX-headquartered chain with annual revenue of between $300 million and $500 million said that he expects the project to "pay for itself within 18 months."Read more...

Hewlett-Packard unveiled a memory chip the size of a tomato seed on Monday in its Palo Alto laboratories. The tiny chip, called the Memory Spot, can be attached unobtrusively to any object and carry media or data. HP is positioning the chips as a direct alternative to RFID.

“It has some of the characteristics of RFID but it’s very different because it’s orders of magnitude different in bandwidth,” said Howard Taub, vice president and associate director of HP Laboratories, told PCMagazine. “It’s like comparing a monkey and a human. There are some similarities but the capabilities are very different.” The Memory Spot has a 10 megabits-per-second data-transfer rate and can store up to 4 megabits of data, although the demonstration chips stored only 256 kilobits. The chip has an integrated antenna, which is why it is so much smaller than an RFID chip, which gets most of its size from the separately attached antennae. It receives power through inductive coupling from a special read-write device that extracts data from the memory on the chip. RFIDUpdate had an excellent analysis on Memory Spot versus Gen2 while PC Magazine did a good write-up of the announcement itself.…

Albertsons will give up its online shopping business as of next week after a 4-year effort. The decision to halt its online shopping and delivery service in the Bay Area, Sacramento, Dallas-Fort Worth and Phoenix markets on July 21 comes a month after ownership of the grocery chain changed, according to a report in Wednesday’s San Jose Mercury-News.

Albertsons began offering its online grocery shopping service in the Bay Area in March 2002. Customers who shopped online could either pay $4.95 to have their orders made ready for pickup at an Albertsons store in the online delivery area or pay $9.95 for home delivery. But, like many other online grocery ventures over the years, Albertsons.com was not profitable, an industry expert said. “I’d heard it’s been struggling for some time. I think online is not necessarily a viable way to sell groceries,” said George Whalin, president of Retail Management Consultants in San Marcos. To read the San Jos Mercury-News story, please click here.…